ds for low taxation levels, accompanied by high levels of public service, a phenomenon which was built upon by the Ronald Reagan campaign committee in 1980, and which was carried to ridiculous extremes by the Reagan Administration during the January 1981 January 1989 time period, culuminating in the enormous federal budget deficits of those years.
State and local governments, already fiscally pinched by the reduced tax revenues no decrease in service levels
phenomenon, were hit further with federal revenue sharing reductions. One response by many state and local governments was the imposition of fee for services policies. A fee for service policy is a form of tax shifting (Holcombe, 1988).contracting out of services. Tax shifting is a procedure whereby the burden of taxation is shifted from the entity on which the tax is being applied to another entity. As an example, a tax levied on a manufacturer of a product will, in most instances, be shifted forward by the manufacturer to the consumer of
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